1. Editorial Note

On January 21, 1969, the President’s Assistant for National Security Affairs, Henry Kissinger, sent National Security Study Memorandum (NSSM) 4 to the Secretaries of State and Defense, the Director of the Bureau of the Budget, the AID Administrator, and the President of the Export-Import Bank informing them the President had mandated preparation of a paper on U.S. foreign aid policy for NSC consideration. The paper was to be prepared by an Ad Hoc Working Group chaired by Deputy Under Secretary of State for Economic Affairs Nathaniel Samuels and was to include senior officials from the aforementioned agencies and institutions, as well as Treasury, Agriculture, and NSC Staff. The Chairman could include representatives from other agencies as appropriate. He was to forward his report to the NSC Review Group by March 15, 1969. (National Archives, RG 59, S/S Files: Lot 80 D 212, NSSM 4)

At the Council of Economic Advisers, Courtenay Slater on January 22 sent to Council members Paul McCracken, Henrik Houthakker, and Herbert Stein a memorandum alerting them to foreign aid and LDC trade issues facing the new administration. Slater apprised them of the Javits Amendment to the Foreign Assistance Act, which required the President to make a comprehensive reappraisal of U.S. foreign assistance programs, with an interim report to Congress by July 1, 1969, and a final report by March 1970. She noted the recently completed Perkins Commission Report, which she thought would be valuable background for the Javits Amendment reappraisal, and asserted the need to establish an appropriate interagency process for the reappraisal. She cited a January 2 New York Times report that the President was expected to establish a special committee on foreign aid shortly after his inauguration and noted the trend that would lead to the enactment of legislation to establish the Overseas Private Investment Corporation, the need for International Development Association and Asian Development Bank authorizing legislation for FY 1969 and FY 1970, the initiative of the Organization for Economic Cooperation and Development and the UN Conference on Trade and Development on tariff preferences for developing countries, and commodity initiatives for developing countries. [Page 2](Ibid., Nixon Presidential Materials, White House Central Files, Box 30, Houthakker-Foreign Aid Policy) For documentation on the Perkins Commission Report, see Foreign Relations, 1964-1968, volume IX, Documents 69, 79 81, and 84.

The NSC Review Group was scheduled to meet on March 21 to consider a draft response to NSSM 4 prepared by the Ad Hoc Working Group. See footnote 3, Document 4. In preparation for the March 21 meeting, Assistant Secretary of State for Economic Affairs Greenwald sent Counselor Richard Pedersen a March 20 memorandum indicating that the Department of Defense and the Joint Chiefs of Staff had a major problem with the paper, although the NSC Staff and Treasury would probably have only drafting changes. He attached an undated memorandum from Philip J. Farley that described the Defense Department view that the paper was not responsive to the NSSM 4 directive, did not adequately address alternative strategies, and did not analyze the political aspects of aid. More fundamentally, Farley objected that the paper was seriously deficient in defining the first objective of “foreign assistance” as the assurance of the military security of “exposed allies” rather than U.S. national security. He noted that “Americans are basically agreed on the need to spend for our allies’ security,” but asserted: “The Foreign Assistance Act is introduced by a statement of policy which explicitly relates our assistance programs—both economic and military—to the national security of the United States.” He pointed out that that week the Chairman of the House Foreign Affairs Committee had written Secretary of State Rogers and Secretary of Defense Laird to remind them that his “support for the foreign assistance program has been based on the belief that the programs authorized by the FAA were essential to the security of the United States.” (National Archives, RG 59, S/S Files: Lot 73 D 288, 21 March Review Group Meeting)

On March 25 Richard Pedersen sent a memorandum to Secretary of State Rogers reporting on the Review Group meeting. Pedersen wrote that as a result of the Defense objections the paper would focus only on economic assistance, and military assistance would be the subject of a later study. Pedersen reported that the agreed main issues for NSC consideration would be 1) the objectives of economic assistance; 2) alternative future aid levels; 3) the degree by which multilateral assistance should be increased; 4) the current AID budget, in particular whether or not to trim the $2.3 billion Johnson administration request or support the full amount with a request for a separate technical assistance bureau and the creation of a private investment corporation; and 5) the possibility of supporting tariff preferences for developing countries, which it was agreed were of little economic importance but might be politically valuable in light of the importance attached to preferences by developing countries. (Ibid., NSSM 4)